Sunday, October 17, 2021

London needs 5,000 new homes a year to have a minimum 10,000 homes per year

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Updated Policy Review by Chris Stephen, director of planning policy and development, Department for Communities and Local Government

“Don’t take any chances with your bottom line if you haven’t created enough homes in your district to cover local demand. The Treasury can rightly point to an aggregate national shortfall of almost 4 million homes and figures showing that the proportion of social housing tenants in England with private rents or letting income exceeding the rents they’d be paying if they were in social housing has doubled to 53 per cent.

Providing new houses for London and the South East therefore represents our single greatest challenge. This is an issue that won’t ease until the whole nation builds more homes. For London, the current housing affordability crisis has become increasingly stark. In more than half of the boroughs where more than 20 per cent of the population are poor, it is more than three times as costly to rent privately than it is to buy. Average prices for two-bedroom flats in inner London exceed £837,000, with the highest reaching £1.17m in Notting Hill and £938,000 in Bermondsey.

Meanwhile, the gap between the cheapest area to buy and the most expensive has stretched from nearly £450,000 in Tower Hamlets to more than £900,000 in Bromley and Redbridge and around £640,000 in Inner London. This is a severe problem for first-time buyers and many London Councils’ analysis suggests a lack of properties on the market is limiting potential sales in the best locations. For example, 40 per cent of the National Airports Authority’s Terminal One redevelopment would be available only to London Councils’ first-time buyers. It is also a problem that the Mayor has identified as having the capacity to worsen the problem. Last year, just 2,200 homes were delivered in the boroughs most severely affected by the housing affordability crisis. This is 14 per cent of the Department for Communities and Local Government’s recommended 2,800 extra homes in the boroughs most acutely affected. If we’re to tackle the housing crisis head on, we need to ensure delivery of at least 10,000 new homes a year and the action is easy: Local authorities on council estates need not meet the previous government’s specified annual target of 8,000 new homes, but simply use their planning powers to clear land for new construction. If the Chancellor delivers the additional council house delivering work needed for London in his summer budget, our local authorities will need the ability to use their powers, not just to help London to ease the housing affordability crisis but to allow other parts of the country to catch up to us.

Without more homes, the Mayor will have little alternative but to continue pursuing his attempt to support a development land rate raising mechanism, which could earn London Councils income from land held outside our planning areas. In particular, his proposals to allow the extension of the land rate raising mechanism to core urban areas are the best way forward. By unlocking property at the heart of our cities, our region can begin to catch up with the rest of the country.

The Report is available here.

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